With raw cashew nuts exports accounting for 25% of the GDP and over 90% of the exports of Guinea-Bissau, cashew nuts production represents over 40% of annual income for over half of the country’s population. Recent studies have shown that the farm gate price, at which producers sell their raw cashew nuts, is a critical variable with a huge impact on the country’s GDP growth. Disperse ownership of small and medium cashew plantations across the population makes the impact of farm gate prices on poverty levels even larger. The increased variability of international raw cashew nuts prices in recent years has introduced an important source of inefficiency in this market: accurate information about short-term fluctuations in prices rarely reaches producers. This implies that farmers frequently end up selling their cashew nuts at a much lower price than they could, were they to be well informed. Aware of this problem, a live-fair-price mobile phone information service called M-CADJU was launched in 2018. However, lack of promotion for this initiative has resulted in a very low take-up.
In this project, Brais Alavrez Pereira, Tatiana Martinez Zavala, Adewusi Mendonça and Sebastian Schäber test an intervention that will aim to increase M-CADJU take-up rates and usage, and to improve the economic and financial understanding of farmers. The intervention will consist of three different treatments: 1) an explanation of the M-CADJU service; 2) the explanation as well as a subsidy covering the service costs; and 3) the explanation followed by business, financial and agricultural training. An improved understanding of market dynamics, combined with better information, should improve farmers’ awareness of feasible prices, improving their capacity to negotiate better deals for their production. The experimental design will allow the researchers to separate the effect of having a better financial and market understanding from that of improved access to price information.
The cashew sector occupies a central position in the national Strategic Development Plan, and the Government, through the Ministry of Economy and Finance, the Ministry of Agriculture and the National Cashew Agency, is closely involved with this intervention, increasing the potential for this project and its findings to be scaled up into a national programme. This would have the potential to improve the efficiency of the internal cashew market increasing farm gate prices. Selling cashew nut production at a higher price should directly imply higher household revenue importantly contributing to the country’s GDP growth and poverty reduction.
